BREAKING NEWS

From the Borowitz Report:

September 17, 2002
Breaking News
IRAQ AGREES TO WEAPONS INSPECTIONS;
CHENEY BEGS THEM TO RECONSIDER
Don’t Make Any Hasty Decisions, Vice President Urges Saddam

Just minutes after the government of Iraq agreed to the unconditional return of U.N. weapons inspectors, Vice President Dick Cheney urged the Iraqis to reconsider their decision.

Mr. Cheney added that accepting weapons inspectors back into their country was a ‘big decision’ and encouraged the Iraqis to ‘sleep on it.’

ANCHOVIES

Chris Williams: ‘Only brine shrimp can live in the Great Salt Lake. It’s too salty for anything else. The entire lake region, including the nerve gas storage facilities to the south and the Air Force bombing range to the west, was once under a huge inland sea many thousands of years ago. It became separated from the ocean and largely dried up, leaving the salt behind. The deserts to the south and west are salt, not sand. BTW, that water you saw is at 4200 feet above sea level.’

DICK DAVIS #33

Item 33: The Market Has Its Own Agenda

Because the media fosters the myth that whatever happens to a stock or the market on a particular day is linked to news, there is the perception that the market follows the news. Actually, it’s the other way around. The market is the leader and the news follows. There is always good and bad news on a stock. Let’s imagine the good news is listed in Column A and the bad news in Column B. If the stock goes up, we use Column A to explain the move; if it goes down, we go to Column B. In 1987, there was no ‘trigger’ news, none, to explain the market’s 22% collapse on one day, October 19. But there was no shortage of negative stories cited after the fact. The obvious exception to the irrelevance of news is when the news is a surprise, in which case it can trigger an immediate, if not lasting, response.

So if it’s not ‘news’, what are the overriding forces that influence the market’s behavior? It’s my view that the market has its own needs and that whatever course it must take to satisfy those needs, it will take. Following a bull market, for example, its primary need is to allow enough time to pass to heal the valuation excesses of the previous cycle. Or it may need enough time to pass to allow earnings to catch up to unreasonably high prices. Or it may need enough time to restore the confidence level of investors. In the present market environment, for example, the combination of a bear market, a recession and September 11 has created a deep wound that is likely to take more time to heal. The market’s malaise has caused us to go from a ‘buy on weakness’ to a ‘sell on the rally’ mentality. It is only the prolonged reinforcement that comes from seeing the market go up, hold its gain, and then go up some more – from seeing that ‘buying on dips’ works, and then works again and again, that will restore investor confidence. Or the market may simply have a need to be true to its perverse nature by doing whatever it has to do to make the majority of people wrong. In any event, the market will play out its role, independent of the news, analysis and speculation swirling around it. Yes, news of earnings, the economy, interest rates and inflation are major long-term influences but, in terms of priority, the market will satisfy its own needs first. It will not be deterred from its own agenda.

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